do i have to convert the resolution of an avi file to 320*240 when i play it with divx mobile on an n95.
divx mobile
You don't HAVE TO.
Should you?
If you don't wanna play it on a TV or if it's a cartoon then YES.
That will save you a lot of space on a memory card, the playback will be better (N95 can be a bit slugish with 700MB file) and on the phone screen it will look equally good.
If you wanna display it on the TV I'd leave the original resolution, unless it's a cartoon - they look good on a TV even in 320x240.